Demolition Activity Still Lacking Momentum

As with newbuilding orders, ships’ demolition activity has also slowed down considerably over the course of the past few weeks. In its latest weekly note, Clarkson Platou Hellas said that “last week was distinctly quiet as the shortage of tonnage availability is now clearly evident. This lack of new vessels entering the market may be a welcome stance in this holiday season as local fundamentals in the Indian sub. Continent remains unstable. Rates from India continue to weaken, and thus sentiment too, and the general opinion is that this market could remain subdued for the next couple of months but many are optimistic that this position could be reversed in the last quarter. Pakistan remains uncertain at this current time too due to their recent election results and in addition, the impact being caused locally by the continuing wait to cut the tankers now lying on the yards. Bangladesh seems to be the only ‘open’ market at this precise moment with positive inquiry emanating from the waterfront”, Clarkson Platou Hellas said.

In a separate note, Allied Shipbroking added that “the recent slump in scrap prices and the lack of demo candidates, has led to subdued activity taking shape again this past week, with very few notable movements being seen since last Friday. Needless to say that the monsoon rains are still affecting the overall appetite being seen from the Indian Sub-Continent. Offered rates in China continued to collapse with prices falling now below the $200/Ltd mark, phasing the country out competition. Indian steel prices have also played their part in the local market for another week, with prices following a declining trend during the last 3 weeks. Meanwhile, permission for scrapping of tankers has been given only to a limited number of Pakistani scrapyards up till today, adding to the uncertainty held by cash buyers. Offered prices in Bangladesh were also in decline, but market players expect activity to increase after the summer months. In the key ship type sectors, activity was only being seen for a 20 years old MR tanker for a price of $365/Ldt and a 23 years old Panamax dry bulker for a price of $293/Ldt. All in all, market participants expect that end breakers will have to offer improved price levels within the next few weeks in order to revamp interest amongst sellers and boost confidence amongst cash buyers”.

Meanwhile, GMS, the world’s leading cash buyer said in its own weekly report that “for the first time (in a long time), the ship recycling industry has witnessed progressively declining prices across all 5 major recycling destinations over the span of a few weeks. Consequently (and unsurprisingly), 2018s summer inertia continues on for yet another week, with increasingly fewer units being proposed / negotiated for sale. Meanwhile, there finally seems to be some good news coming out of Pakistan this week, with Imran Khan’s party winning the local elections. It is hoped that this in turn will have a knock-on effect for the country overall – in terms of business & economic optimism. Notwithstanding, the recent domestic developments still remain tinged with confusion as far as cutting permissions (for the recently delivered tankers) are concerned.

News from the ground is that the requested issuance of gas free certificates from the explosives department in Islamabad has been postponed once again, until the relevant representatives re-inspect all tankers beached locally, a procedure that is expected to commence from August 13th. As such, interest from Pakistan for any available (dry) units has escalated in recent weeks, the ongoing dearth of which has left Gadani Buyers increasingly frustrated as the weeks go by. In India, the trucker’s strike was finally called off this week as business and transportation of product from local yards has resumed. Yet, prices failed to improve in line with expectations and Alang Buyers struggled to acquire any notable units for another week. Bangladesh has also been gripped by student strikes, as the focus in all sub-continent locations now seems to be shifting away from ship recycling. Constant monsoon rains have persisted into August and Eid holidays are also on the horizon, further dampening any interest that may have been”, GMS concluded.